Mythbusters: Louisiana Budget Edition

June 27, 2016

MYTH: The budget proposal for the fiscal year that begins on July 1 is $2 billion larger than last year’s budget.

FACT: Facing a budget shortfall last fiscal year, the previous administration simply chose not to include large expenses in an attempt to make the shortfall appear artificially smaller. To put it simply, the administration did not pay its bills and pushed the costs into the new budget year. For example, the previous administration only paid 11 – instead of 12 – monthly medical vendor payments, leaving Gov. Edwards on the hook for 13, rather than 12 payments. That added $126.2 million to the budget. In addition, the previous administration did not properly budget for the increase in the number of people who would use Medicaid – they ignored the increase for the first time since the Medicaid program began. That neglect added another $135 million for the Edwards administration to cover. To make matters worse, the previous administration did not account for expenses that they knew would come due this past year for the Department of Children and Family Services, $11.4 million; Department of Corrections, $14 million; and the Office of Juvenile Justice, $9.7 million. But more than anything is that they built last year’s budget on $800 million in one-time money, even though the expenses would be recurring year after year. Finally, the budget appears larger because new federal tax dollars are coming home to Louisiana because Gov. Edwards has expanded Medicaid, which means our state will now be receiving more federal money to cover health costs for the working poor of our state – while actually saving more than $180 million in state dollars.

BACKGROUND: Louisiana is currently facing a $600 million budget shortfall that threatens funding for TOPS, K-12 education, higher education, and life-saving health care services. Gov. John Bel Edwards called the legislature into the just-ended second special session in an effort to reduce next year’s budget shortfall. (All told, Gov. Edwards worked together with the legislature to address all but $300 million of next year’s deficits through cuts and revenue raised). Unfortunately, there is some misinformation circulating in the public. With that in mind, the administration will occasionally send information to the public to set the record straight.